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Exhibit 99.1
1600 West Merit Parkway • South Jordan, UT 84095
Telephone: 801-253-1600 • Fax: 801-253-1688
PRESS RELEASE
FOR IMMEDIATE RELEASE
Date: | March 8, 2005 | |
Contact: | Anne-Marie Wright, Director of Corporate Communications | |
Phone: | (801) 208-4167e-mail: awright@merit.comFax: (801) 253-1681 |
MERIT MEDICAL REPORTS RECORD SALES FOR THE
FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2004
SOUTH JORDAN, UTAH—Merit Medical Systems, Inc. (NASDAQ:NMS:MMSI), a leading manufacturer and marketer of proprietary disposable accessories used primarily in cardiology and radiology procedures, today announced financial results for the fourth quarter and fiscal year ended December 31, 2004.
For the fourth quarter of 2004, the Company reported record revenue of $39.3 million, a 12% increase over $35.1 million for the fourth quarter of 2003. Net income for the fourth quarter was $4.3 million, or $0.16 per share. This compares to net income of $4.7 million, or $0.17 per share, reported in the fourth quarter of 2003. Earnings per share for the fourth quarter of 2004 were negatively impacted by a one-time severance expense and costs relating to Sarbanes-Oxley compliance for a total of approximately $665,000 (net of tax) or $0.02 per share.
For the year ended December 31, 2004, the Company reported record revenue of $151.4 million, an 11% increase over $136.0 million in revenue reported for the year ended December 31, 2003. In addition, the Company reported record net income of $17.9 million, or $0.65 per share, for calendar year 2004. This compares to net income of $17.3 million, or $0.64 per share, for calendar year 2003. Earnings per share for 2004 were affected by a one-time severance expense, costs relating to Sarbanes-Oxley compliance, and a non-recurring gain from a litigation settlement for a total of approximately $792,000 (net of tax) or $0.03 per share. Net income for 2003 included a non-recurring gain from the settlement of a legal dispute and sale of land for a total of approximately $627,000 (net of tax), or $0.02 per share.
Sales of every category of Merit's products grew in both the fourth quarter and the year 2004, compared to the same periods of 2003. For the fourth quarter of 2004, catheters were up 14%; inflation device sales rose 13%; stand-alone devices increased 13%; and custom kits grew 6%. Sales from Merit MedSource, which the Company acquired in November 2004, contributed less than 1% to total sales.
For the year ended December 31, 2004, catheter sales increased 16%; inflation device sales grew 11%; custom kit sales were up 10%; and stand-alone device sales rose 10%.
"We are pleased to announce strong sales in every product category, and we expect strong sales to continue," said Fred P. Lampropoulos, Merit's Chairman and CEO. "We are investing in the future with the expansion of our facilities, reorganization of certain departments, and an exciting product pipeline. We believe these investments will serve us well long-term as we strive to build the appropriate infrastructure for substantial future growth."
Gross margins were down from 46.4% of sales in the fourth quarter of 2003 to 43.9% of sales in the fourth quarter of 2004. The gross margin decline in the fourth quarter of 2004 was due primarily to
increased production expenses, product mix (MedSource trays), and higher cost of materials, compared to the fourth quarter of 2003.
Gross margins were down slightly from 44.7% for calendar year 2003 to 44.6% for calendar year 2004.
Selling, general and administrative expenses were 23.6% and 23.2% of sales for the fourth quarter and calendar year 2004, respectively, compared with 22.4% of sales for both comparable periods of 2003. Without a one-time severance expense and costs relating to Sarbanes-Oxley compliance, selling, general and administrative expenses would have been 21.0% and 22.3% of sales, respectively, for the fourth quarter and calendar year 2004.
Research and development costs were 3.6% and 3.4% of sales, respectively, for the fourth quarter and year ended December 31, 2004, compared to 3.4% of sales for both comparable periods of 2003.
Merit's effective tax rates for the fourth quarter and calendar year 2004 were 36.7% and 36.0%, respectively, compared to 36.4% and 36.0% for the same periods of 2003.
The Company's cash position rose to $33.0 million on December 31, 2004, compared to $30.2 million on December 31, 2003. This cash balance is net of $15.8 million spent as of December 31, 2004 on Merit's building expansions in South Jordan, Utah, and Galway, Ireland.
The Company anticipates that its sales for the year ending December 31, 2005 will be in the range of $167-171 million. Management is currently engaged in developing and refining its budgets for 2005, which are expected to include expenses for the start-up and release of several new products, the construction of new facilities and expanded staffing, as well as the assimilation of Merit's recent MedSource acquisition. Therefore, management is not providing guidance at this time with respect to 2005 earnings expectations. Management anticipates that it will provide guidance regarding 2005 earnings on or before March 31, 2005.
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INCOME STATEMENT
(Unaudited, in thousands, except per share data)
| Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2004 | 2003 | 2004 | 2003 | |||||||||||
SALES | $ | 39,339 | $ | 35,128 | $ | 151,398 | $ | 135,953 | |||||||
COST OF SALES | 22,083 | 18,833 | 83,908 | 75,230 | |||||||||||
GROSS PROFIT | 17,256 | 16,295 | 67,490 | 60,723 | |||||||||||
OPERATING EXPENSES | |||||||||||||||
Selling, general and administrative | 9,282 | 7,861 | 35,071 | 30,468 | |||||||||||
Research and development | 1,405 | 1,205 | 5,079 | 4,626 | |||||||||||
Total | 10,687 | 9,066 | 40,150 | 35,094 | |||||||||||
OTHER OPERATING INCOME | |||||||||||||||
Gain on sale of land | 508 | ||||||||||||||
INCOME FROM OPERATIONS | 6,569 | 7,229 | 27,340 | 26,137 | |||||||||||
OTHER INCOME (EXPENSE) | |||||||||||||||
Litigation settlement | 100 | 475 | |||||||||||||
Interest income | 156 | 127 | 556 | 386 | |||||||||||
Interest expense | (1 | ) | (2 | ) | (6 | ) | (10 | ) | |||||||
Miscellaneous income | 61 | 17 | 16 | 34 | |||||||||||
Total Other Income—net | 216 | 142 | 666 | 885 | |||||||||||
INCOME BEFORE INCOME TAX EXPENSE | 6,785 | 7,371 | 28,006 | 27,022 | |||||||||||
INCOME TAX EXPENSE | 2,488 | 2,685 | 10,074 | 9,727 | |||||||||||
NET INCOME | $ | 4,297 | $ | 4,686 | $ | 17,932 | $ | 17,295 | |||||||
EARNINGS PER SHARE— | |||||||||||||||
Basic | $ | 0.16 | $ | 0.18 | $ | 0.68 | $ | 0.68 | |||||||
Diluted | $ | 0.16 | $ | 0.17 | $ | 0.65 | $ | 0.64 | |||||||
AVERAGE COMMON SHARES | |||||||||||||||
Basic | 26,454,335 | 25,844,394 | 26,300,773 | 25,401,445 | |||||||||||
Diluted | 27,491,075 | 27,615,738 | 27,690,668 | 27,033,964 | |||||||||||
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BALANCE SHEET
(Unaudited, in thousands)
| December 31, | ||||||||
---|---|---|---|---|---|---|---|---|---|
| 2004 | 2003 | |||||||
ASSETS | |||||||||
Current Assets | |||||||||
Cash | $ | 33,037 | $ | 30,204 | |||||
Trade receivables, net | 19,724 | 17,729 | |||||||
Employee and other receivables | 157 | 267 | |||||||
Inventories | 23,096 | 21,269 | |||||||
Prepaid and other assets | 797 | 823 | |||||||
Deferred income tax assets | 56 | 221 | |||||||
Income tax refund receivables | 375 | ||||||||
Total Current Assets | 76,867 | 70,888 | |||||||
Property and equipment, net | 52,492 | 29,197 | |||||||
Intangibles, net | 1,990 | 1,846 | |||||||
Goodwill | 5,570 | 4,765 | |||||||
Other assets | 1,822 | 573 | |||||||
Note Receivable | 1,000 | ||||||||
Deposits | 136 | 32 | |||||||
Total Assets | $ | 139,877 | $ | 107,301 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
Current Liabilities | |||||||||
Current portion of long-term debt | $ | 7 | $ | 17 | |||||
Trade payables | 10,728 | 5,700 | |||||||
Accrued expenses | 8,467 | 7,988 | |||||||
Advances from employees | 221 | 159 | |||||||
Deferred taxes payable | 227 | ||||||||
Income taxes payable | 2,273 | 87 | |||||||
Total Current Liabilities | 21,923 | 13,951 | |||||||
Deferred income tax liabilities | 2,580 | 3,020 | |||||||
Long-term debt | 5 | ||||||||
Deferred compensation payable | 1,702 | 579 | |||||||
Deferred credits | 2,615 | 1,507 | |||||||
Total liabilities | 28,825 | 19,057 | |||||||
Stockholders' Equity | |||||||||
Common stock | 42,559 | 37,702 | |||||||
Retained earnings | 68,891 | 50,959 | |||||||
Accumulated other comprehensive loss | (398 | ) | (417 | ) | |||||
Total stockholders' equity | 111,052 | 88,244 | |||||||
Total Liabilities and Stockholders' Equity | $ | 139,877 | $ | 107,301 | |||||
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CONFERENCE CALL
Merit Medical invites all interested parties to participate in its fourth quarter and year-end conference call today, March 8, 2005, at 5:00 p.m. Eastern (4:00 p.m. Central, 3:00 p.m. Mountain, and 2:00 p.m. Pacific). The domestic phone number is 800-218-8862, and the international number is 303-262-2130. A live webcast as well as a rebroadcast can be accessed through the webcast tab of the Investors page at www.merit.com or through the webcasts tab at www.fulldisclosure.com.
During the conference call, 2004 results will be discussed in more detail.
ABOUT MERIT
Founded in 1987, Merit Medical Systems, Inc. is engaged in the development, manufacture and distribution of proprietary disposable medical accessories used in interventional and diagnostic procedures, particularly in cardiology and radiology. Merit serves client hospitals worldwide with a domestic and international sales force totaling approximately 70 individuals. Merit employs approximately 1,350 people worldwide, with manufacturing facilities in Salt Lake City and South Jordan, Utah; Santa Clara, California; Angleton, Texas; Richmond, Virginia; Maastricht, The Netherlands; and Galway, Ireland.
Statements contained in this release which are not purely historical are forward-looking statements within the meaning of the Private Securities Litigation Act of 1995 and are subject to risks and uncertainties such as those described in Merit's Quarterly Report on Form 10-Q for the quarter ended September 30, 2004. Such risks and uncertainties include, market acceptance of new products, introduction of products in a timely fashion product recalls, delays in obtaining regulatory approvals, or the failure to maintain such approvals, cost increases, fluctuations in and obsolescence of inventory, price and product competition, availability of labor and materials, development of new products and technology that could render or products obsolete, product liability claims, modification or limitation of governmental or private insurance reimbursement, infringement of our technology or the assertion that our technology infringes the rights of other parties, foreign currency fluctuations, challenges associated with the Company's growth strategy, changes in health care markets related to healthcare reform initiatives, litigation and other factors referred to in the Company's 10-Q and other reports filed with the Securities and Exchange Commission. All subsequent forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by these cautionary statements. Actual results may differ materially from anticipated results. Financial estimates are subject to change and are not intended to be relied upon as predictions of future operating results, and Merit assumes no obligation to update or disclose revisions to those estimates.
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MERIT MEDICAL REPORTS RECORD SALES FOR THE FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2004